February 21, 2019

A French court recently ordered Swiss Bank UBS to pay a penalty of 4.5 billion Euros (equal to about $5.1 billion U.S. Dollars) for allegedly facilitating tax evasion. The U.S. fined UBS only $78 million for similar charges in 2009 (the equivalent of $89 million in today's dollars).

To put this into context, France's GDP is about 13.4 percent of U.S. GDP, and France has proportionately fewer ultra-high net worth individuals (only 6.5 percent as many billionaires, who on average are less wealthy than billionaires in the U.S.). Thus, scaled by number of billionaires, France fined UBS more than 1,000 times as much as the U.S. fined UBS for facilitating tax evasion (scaled by GDP, nearly 500 times as much).

France, Italy, Spain, the UK, Sweden,Greece, Ireland, Bulgaria, Israel, Jordan and the Netherlands are facing popular protests over regressive tax policies that protestors say excessively favor the rich over the middle and working class. Protests in France were set off by repeal of wealth taxes and other regressive tax policies, social spending cuts, and loosening labor protections.

February 20, 2019

Scott F. Norberg argues for a law school accreditation standard tied to student employment outcomes. The proposal is interesting, and may have some advantages over a standard tied to bar passage rates, for example because it does not give state bars--who can make the bar exam more or less challenging and have incentives to strengthen barriers to entry--excessive control over access to legal education. However, there are several potential concerns.

Employment is systematically higher among certain demographic groups across education levels for reasons that have little to do with value added by law school. An employment-outcomes based standard could encourage law schools to focus on admitting groups with higher expected employment.

February 19, 2019

Some of my thoughts on the ultra-high net worth wealth tax debate, and its implications for innovation and economic growth, are available here. For thoughts on the adminstrability and constitutionality of ultra high net worth taxes, see here.

February 01, 2019

Brian Leiter and Paul Caron both recently noted a study by Adam Chilton, Jonathan Masur, and Kyle Rozema which argues that law schools can increase average faculty productivity by making it harder for tenure track faculty to get tenure. While this seems plausible, denying tenure more often is no free lunch.

A highly regarded study by Ron Ehrenberg (published in the Review of Economics and Statistics) found that professors place a high monetary value on tenure, and a university that unilaterally eliminated tenure would either have to pay more in salary and bonus or suffer a loss in faculty quality. After controlling for faculty quality, university rank, and cost of living, university economics departments that are less likely to offer faculty tenure must pay untenured faculty more, in part to compensate for increased risk. Reduced tenure rates is associated with higher productivity, but it is costly.

It's easy to understand why. A promising candidate with offers from otherwise comparable universities A and B would be unlikely to take an offer from A knowing that A denies tenure 70 percent of the time while B only denies tenure 10 percent of the time.

Faculty who are untenured and at an institution with high tenure denial rates would also have strong incentives to spend their most productive years avoiding publishing anything that might upset private sector employers who could give them a soft landing in the event that they are denied tenure. Quantitative measures of faculty "productivity" based on number of citations and publications don't capture the harmful qualitative shift this would produce in faculty research, particularly in an area like law.

There are numerous other advantages to tenure (and disadvantages to weakening it), which I've discussed here and here, including protecting intelletual freedom, encouraging faculty to share rather than hoard knowledge, promoting investment in specialized skills, aligning faculty and institutional incentives, increasing the rigor of teaching and improving outcomes for students (compared to use of adjuncts).

December 19, 2018

In a thought provoking essay in the Chronicle of Higher Education, Professor Samuel Moyn argues that law schools' focus on judge made law in general, and the Supreme Court in particular, is counterproductive especially when justified on ostensibly progressive grounds. Offline, Professor Moyn suggested that, to better help students understand how the legal system influences the distribution of economic and political power, progressives should focus more on teaching business law subjects like taxation and anti-trust.

December 16, 2018

The consulting firm McKinsey is a leading employer of graduates of elite law schools, business schools, medical schools, and other professional programs. The New York Times recently ran a piece attempting to link McKinsey to regimes that abuse human rights. McKinsey's response appears below.

Readers of this blog are probably familiar with how uneven in quality New York Times coverage can be in the higher education context. I would encourage readers not to jump to conclusions about McKinsey based on N.Y. Times coverage.

Note: I worked as consultant at McKinsey in New York approximately 10 years ago. I have published in the N.Y. Times within the last 3 years.

December 12, 2018

LSAC is rolling out several initiatives to make the LSAT more accessible, including a tablet-based version of the test that will increase the number and type of facilities that can serve as test administration centers, and will pave the way for more frequent test administration. LSAT takers will also be able to take the essay portion of the exam from home through "remote proctoring."

December 01, 2018

The American Association of University Professors recently authorized an investigation of Vermont Law School following a restructuring that stripped most of Vermont's tenured faculty members of tenure and slashed their pay. The restructuring was reportedly undertaken without sufficient evidence of financial exigency and did not follow proper procedures. I've previously noted that if allegations prove true, this restructuring could present challenges for Vermont when it seeks to renew its ABA accreditation because the restructuring may violate ABA standard 405. A negative report from the AAUP could influence the ABA site visit team and the Section on Legal Education. Vermont's next site visit is scheduled for the 2019-2020 academic year.

Even without regulatory action, a negative report could severely damage Vermont's academic reputation. Vermont remains home to well-respected legal scholars, such as Jennifer Taub, but since the restructuring the overwhelming majority of its classes are taught by adjuncts and lecturers.

November 02, 2018

After cripplingteachers unions in Wisconsin, the Republican controlled state government moved to slash education budgets and reduce educators' autonomy, both in K-12 education and in higher education. Many experienced teachers have left the state or left education all together. Student performance deteriorated.

Prominent professors have complained about changes to tenure standards which they say constitute the elimination of tenure or its substitution with "fake tenure." A new law essentially forced the university to relinquish any semblance of academic standards with respect to approval of outside speakers. It also subjects students, faculty, and administrators to potentially harsh discipline for disagreeing with political leaders or powerful donors.

Massive budget cuts triggered efforts to eliminate academic programs, mainly in social sciences and the humanities. Some programs have been given a stay of execution only through professors taking on such heavy teaching loads that academic research will grind to a halt.

Faculty are increasingly leaving for greener pastures, and the state--already suffering economically--risks continuing losses of educated professionals and the tax revenue and economic benefits they bring.

Wisconsin could be the canary in the coal mine as the politics of hostility to education go national. As recent federal tax legislation shows, not even well-endowed private universities are immune from political pressure.

On the other hand, there is evidence of a political backlash in Wisconsin as voters increasingly support local property tax increases to fund investments in educaiton. Political hostility to education may be limited to the extent that even voters focused on (largely trumped up) "cultural" issues will eventually reject disinvestment policies that damage the economy.

UPDATE Nov 4, 2018: Jason Yackee (Wisconsin) responded by email to the post above. Professor Yackee views things in Wisconsin as better than they seem, at least on the Madison campus. Yackee also argues that there was overcapacity in parts of the University of Wisconsin system and that budget cuts on some campuses serving smaller communities (or perhaps closures) make sense. I have posted Profesor Yackee's email below, with his permission. My skeptical reaction appears below Yackee's letter.